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Payroll Expense Tax 2018

The 2012 Gross Receipts Tax Ordinance set the new tax to phase in gradually over time. In 2014, gross receipts rates were 10% of the voter approved maximum, rising to 25% in 2015, 50% in 2016, 75% in 2017, and finally 100% in 2018. The tax change was designed to be revenue-neutral: revenue raised by the new gross receipts tax would be used to retire the payroll expense tax. The Controller’s Office is directed to compute the payroll expense tax rate during the phase-in period, using formulas in the ordinance.

For 2018, the payroll expense tax rate is 0.380%.

The basic reason for the remaining payroll expense tax rate in 2018, after the gross receipts tax has fully phased in is that gross receipts tax revenue has been less than expected.